New public management (NPM) was introduced in the 1980s as an approach to running public service organizations that is used in government and public service institutions and agencies.
NPM is also known as Managerialism, Market-based Public Administration and Entrepreneurial Government.
It was an effort to make the public service more “business-like” and to improve its efficiency by using private sector management models.
Public organizations acted as both the funders and providers of public services.
The funding a public bureau obtained was only partly dependent on performance—and, frequently, inversely correlated, for as money was poured into the worst performing administrations to see if they could catch up with the average.
However, under this system, a poor performance may be rewarded, since those organizations that fail need extra resources.
Since it was introduced, NPM main aim is to foster competition in the provision of public services whether it is from the public or private sectors to consumers.
Under NPM, citizens are viewed as consumers or recipient of the servicesand looks for many alternatives.
NPM ensures citizen’s freedom of choice and secures quality services to the citizens through competitions.
A healthy competition among the service and product’s sectors allow citizens to choose their service and products according to their needs and choice.
Thus, this allows the citizens to look for other alternatives as consumers.
From this, NPM also ensure efficiency and effectivenessthrough outsourcing tasks and responsibilities externally.
The main aim for this is improve efficiency and reduce costs, such as the specific training of public employees for the delivery of particular services.
Increase in competition should decrease the slack public providers enjoy because of their monopolistic position.
On the other hand, it is also noted an increase competition in providing public services should lead to a more efficient use of public money.
